The future of one of America's oldest and most prestigious newspapers was in the balance today after staff at the Boston Globe voted against accepting a cut in pay and conditions.

If the newspaper goes under, it will amount to the biggest loss yet in an industry that has seen one US paper after another disappear over the last year because of the recession and competition from the internet.

The Globe's owner, the New York Times, which threatened it with closure in April, is to impose a 23% across-the-board pay cut on Globe staff beginning next week.

Donovan Slack, the paper's city hall bureau chief, said today staff were "shell-shocked" over the scale of the pay cut, describing it as a devastating blow. "We are the ones that are going to have trouble paying our mortgages and putting kids through school," she said.

Asked about the Globe's chances of survival, she said: "I have no idea. I pray the institution continues."

The 137-year-old Globe is hugely influential throughout New England but circulation has been falling, down from 382,000 to 350,000 last year, and last year it lost $50m (£31m).

The owners, who are looking for $20m in cuts, said the Globe faces a loss of $85m this year. The New York Times, which bought it in 1993, could opt to close it down or sell it to an outsider, such as Rupert Murdoch, who yesterday expressed interest.

"It's a great newspaper. It's a great institution, The Boston Globe. I can't see it disappearing," Murdoch, chairman of News Corporation, said on Fox Business News.

Over the last year, the US has lost papers such as the Rocky Mountain News in Denver while the Chicago Tribune and the Los Angeles Times have filed for bankruptcy. Staff at the New York Times agreed last month to take a 5% pay cut.

The Boston Globe has been struggling for years, closing down its last three foreign bureaux in 2007.

Staff in the paper's biggest union, the Boston Newspaper Guild, voted narrowly last night – 277 to 265 – to reject the cuts package. About 140 staff failed to vote, although their future is at stake.

The 23% cut is much deeper than the one the staff rejected, which amounted to 8.4% reduction in pay plus cuts in healthcare, pensions and other benefits, including an end to an effective jobs-for-life guarantee for about 200 staff.

Slack, who voted for the deal, said: "I voted in favour of a smaller cut. I think it is a little bit naive in the current newspaper environment not to take some sort of cut."

The company expressed disappointment with the vote. "Since the parties are at an impasse, the Globe will implement the wage reduction effective next week.

"We regret having to take this action, but have no financially viable alternative," the company said in a statement.

The pay cut means that reporters on the highest pay grade, $72,133 a year, will lose $16,590.

The union president, Dan Totten, who last week accused the New York Times of "threats, bullying and negotiating at gunpoint", said the vote meant the New York Times Company "must do better than the offer that was presented. Globe workers and the New England community understand the quality of the Boston Globe - an institution so vital to the life and culture of the region - depends on the fair treatment of the men and women who work so hard to produce it."

The union could take the issue to the Labour Relations Board, where past cases have been tied down in legal wrangling lasting months and even years.